KARACHI: The 12 representative bodies of the value-added textile sector have unanimously urged the government not to give customs rebate or cash subsidy and instead should bring the input cost on a par with regional competing countries.
In a meeting with Commerce Minister Khurram Dastgir, the umbrella organisation of these trade bodies — the Pakistan Apparel Forum (PAF) — sought a level playing field for local exporters in world markets as the country’s exports are in constant decline.
The PAF has cautioned that a customs rebate of six per cent to exporters, as was being considered at the highest level, should not be given in any case because this would give birth to fake exporters and lead to over-invoicing and promote paper shipments.
It added that any relief package should be based on indirect relief by bringing the cost of inputs on a par with regional countries and this would be the best way out for reviving the industry and boosting “genuine” exports.
It has also warned that any direct relief would only help unscrupulous elements and would not prove to be sustainable and will not have a positive long-term effect.
Beside, promoting corruption in the Federal Board of revenue — as had been witnessed in the past when customs rebate and other cash subsidies were given — direct relief or incentives will also encourage foreign buyers for asking similar discount from our exporters, it added.
The textile sector contributes up to 60pc towards export earnings and generates most jobs.
The PAF demanded that tariff of gas and power as well as wages should be brought down on a par with regional competitors to make exporters competitive in the world market. This measure would benefit the entire manufacturing chain and declare the export sector as a separate head of account in tariff structure of gas and power.
The forum stated that Pakistan’s industrial gas tariff was 173pc higher than Bangladesh, 44pc higher than India and 12pc higher than Vietnam. Similarly, industrial electricity tariff was 19pc higher than Bangladesh and India and 41pc than Vietnam.
Moreover, wages in Pakistan were 98pc higher than Bangladesh, 17pc than India and 19pc than Vietnam, it added.
The PAF also drew the policymakers’ attention towards high water tariff and demanded that since water was another most essential requirement of the export sector, its tariff should be uniform all over the country.
It demanded that the export development surcharge of 0.25pc deducted from export proceeds should be abolished and instead be imposed on imports of luxury goods such as cars, soap, shampoo, cosmetics, etc. The forum also wanted the Workers’ Welfare Fund to be cut by half to 1pc.
Published in Dawn, November 27th, 2016